ALUMINIUM supplies may be hit as Chinese smelters face a second electricity rate rise in as many months.

Beijing’s on-grid rate hike could force older smelters to cut output or sell out altogether. From 20 August 2008, the power tariff paid to Chinese thermal generators will rise by 0.02 yuan per kW hour, equivalent to a rate rise of around 5%.

State-owned grids will absorb most of the higher cost, but smelters say this rise will compound their problems with the power deficit in Beijing having already forced some to cut their production of the metal.

According to analysts in China, smelters which did not have their own power plants or which imported alumina would have problems and are likely to have to cut output or sell off assets.