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Derivatives, Hedging Programs and Other Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of material derivative positions
The following table summarizes our derivative positions at September 30, 2019:
Aluminum
 
Maturity Period
(month/year)
 
Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts
 
10/19 through 12/21
 
83.1

Fixed price sales contracts
 
11/19 through 9/21
 
0.8

Midwest premium swap contracts1
 
10/19 through 12/21
 
57.6

Alloying Metals
 
Maturity Period
(month/year)
 
Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts
 
10/19 through 12/21
 
12.9

Natural Gas2
 
Maturity Period
(month/year)
 
Notional Amount of Contracts (mmbtu)
Fixed price purchase contracts
 
10/19 through 12/24
 
7,930,000

Electricity3
 
Maturity Period
(month/year)
 
Notional Amount of Contracts (Mwh)
Fixed price purchase contracts
 
1/20 through 12/21
 
394,680

Euro4
 
Maturity Period
(month/year)
 
Notional Amount of Contracts (euro)
Fixed price purchase contracts
 
10/19 through 1/20
 
3,189,200

____________________
1 
Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.
2 
As of September 30, 2019, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 72% of the expected natural gas purchases for the remainder of 2019, 68% of the expected natural gas purchases for both 2020 and 2021, 83% of the expected natural gas purchases for both 2022 and 2023 and 77% of the expected natural gas purchases for 2024.
3 
As of September 30, 2019, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 54% of our expected electricity purchases for the remainder of 2019, 55% of our expected electricity purchases for 2020 and 46% of our expected electricity purchases for 2021.
4 
We are exposed to foreign currency exchange risk related to firm-price agreements for equipment purchases from foreign manufacturers. We use non-designated foreign currency forward contracts designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers to mitigate our exposure to currency exchange rate fluctuations on these purchases.
Summary of realized and unrealized gains and losses
The amount of loss (gain) included on our Statements of Consolidated Income (all within COGS) associated with all derivative contracts consisted of the following for the periods presented (in millions of dollars):
 
Quarter Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Total amounts of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded
$
298.6

 
$
323.3

 
$
917.2

 
$
983.4

 
 
 
 
 
 
 
 
Loss (gain) recognized in income related to cash flow hedges:
 
 
 
 
 
 
 
Aluminum
$
4.8

 
$
2.1

 
$
13.5

 
$
(1.2
)
Alloying metals
0.5

 
1.0

 
0.7

 
0.4

Natural gas
0.1

 
—

 
0.1

 
(0.1
)
Total loss (gain) recognized in income related to cash flow hedges
$
5.4

 
$
3.1

 
$
14.3

 
$
(0.9
)
 
 
 
 
 
 
 
 
Loss recognized in income related to non-designated hedges:
 
 
 
 
 
 
 
Foreign currency
$
0.1

 
$
—

 
$
0.1

 
$
—

Total loss recognized in income related to non-designated hedges
$
0.1

 
$
—

 
$
0.1

 
$
—
Fair Value of Derivative Assets and Liabilities Measured on Recurring Basis The following table presents the fair value of our derivative financial instruments as of the periods presented (in millions of dollars):
 
September 30, 2019
 
December 31, 2018
 
Derivative Assets
 
Derivative Liabilities
 
Net Amount
 
Derivative Assets
 
Derivative Liabilities
 
Net Amount
Cash Flow Hedges:
 
 
 
 
 
 
 
 
 
 
 
Aluminum –
 
 
 
 
 
 
 
 
 
 
 
Fixed price purchase contracts
$
—

 
$
(10.2
)
 
$
(10.2
)
 
$
0.1

 
$
(13.2
)
 
$
(13.1
)
Fixed price sales contracts
0.1

 
—

 
0.1

 
0.1

 
—

 
0.1

Midwest premium swap contracts
0.6

 
(0.1
)
 
0.5

 
3.2

 
(0.5
)
 
2.7

Alloying Metals – Fixed price purchase contracts
—

 
(2.0
)
 
(2.0
)
 
—

 
(1.7
)
 
(1.7
)
Natural gas – Fixed price purchase contracts
—

 
(2.0
)
 
(2.0
)
 
0.2

 
(0.5
)
 
(0.3
)
Electricity – Fixed price purchase contracts
1.5

 
(1.5
)
 
—

 
0.7

 
—

 
0.7

 
 
 
 
 
 
 
 
 
 
 
 
Non-Designated Hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency – Fixed price purchase contracts
—

 
(0.1
)
 
(0.1
)
 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
2.2

 
$
(15.9
)
 
$
(13.7
)
 
$
4.3

 
$
(15.9
)
 
$
(11.6
)
The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets as of the periods presented (in millions of dollars):
 
September 30, 2019
 
December 31, 2018
Derivative assets:
 
 
 
Prepaid expenses and other current assets
$
1.2

 
$
3.4

Other assets
1.0

 
0.9

Total derivative assets
$
2.2

 
$
4.3

 
 
 
 
Derivative liabilities:
 
 
 
Other accrued liabilities
$
(12.8
)
 
$
(13.2
)
Long-term liabilities
(3.1
)
 
(2.7
)
Total derivative liabilities
$
(15.9
)
 
$
(15.9
)
Fair Value, Non-Derivative Assets Measured on Recurring Basis
The following table classifies our other financial assets under the appropriate level of the fair value hierarchy as of September 30, 2019 (in millions of dollars):
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash and cash equivalents
29.3

 
142.8

 
$
—

 
$
172.1

Short-term investments
—

 
25.3

 
—

 
25.3

Total
$
29.3

 
$
168.1

 
$
—

 
$
197.4

The following table classifies our other financial assets under the appropriate level of the fair value hierarchy as of December 31, 2018 (in millions of dollars):
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash and cash equivalents
22.9

 
102.7

 
$
—

 
$
125.6

Short-term investments
—

 
36.7

 
—

 
36.7

Total
$
22.9

 
$
139.4

 
$
—

 
$
162.3