SHANGHAI, China, June 2 /Xinhua-PRNewswire/ — China Precision Steel (the ”Company”) (Nasdaq: CPSL - News), a niche precision steel processing company principally engaged in producing and selling high precision cold-rolled steel products, today announced that its Chairman, President and CEO, Mr. Wo Hing Li, will donate $19.9 million to the University of Hong Kong. The donation will be funded through the sale of a portion of Mr. Li’s shares of the Company’s common stock.
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On May 29, 2008, the Company filed a Form 4 with the U.S. Securities and Exchange Commission which reported that Mr. Li sold 3,524,810 shares of common stock at a price of $3.75 per share. The sale was pursuant to a stock purchase agreement with accredited investors Hudson Bay Fund, LP, Hudson Bay Overseas Fund, Ltd. and Enable Growth Partners LP amended on May 20, 2008. The first transaction under the stock purchase agreement closed on May 27, 2008 with the sale of the aforementioned shares. A second sale is scheduled to occur on June 17, 2008 with the sale of 1,000,000 shares of common stock at $6.70 per share.

”We strongly believe in the growth of China and would like to promote higher education,” Mr. Li commented. ”All of the proceeds from the sale of common stock under the stock purchase agreement will be donated to the The Chinese University of Hong Kong, which plans to use the funds to build a new college.”

As of May 29, 2008 Mr Li is the beneficial owner of 16,349,240 shares of common stock of the Company. Mr Li’s holding represents 35.6% of the outstanding shares assuming 45,896,288 shares of the Company’s common stock outstanding as of May 15, 2008 as reported in the Form 10-Q filed on May 16, 2008.

About China Precision Steel

China Precision Steel is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel produces high precision ultra-thin, high strength (7.5 mm to 0.05 mm) cold- rolled steel products primarily for automotive components, food packaging materials, saw blades and textile needle manufacturing companies in the People’s Republic of China. However, China Precision Steel is expanding into overseas markets such as Nigeria, Thailand, Indonesia and the Philippines, and intends to expand into Japan, the European Union and the United States in the future.

Forward-Looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Precision Steel on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company’s planned manufacturing capacity expansion in 2008 and predictions and guidance relating to the Company’s future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, business conditions in China, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which China Precision Steel is engaged; cyclicality of steel consumption including overcapacity and decline in steel prices, limited availability of raw material and energy may constrain operating levels and reduce profit margins, environmental compliance and remediation could result in increased cost of capital as well as other relevant risks not included herein. The information set forth herein should be read in light of such risks. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

ine colored steel suppliers in Hebei Province, who take duty of supplying colored steel for prefabricated houses for earthquake-hit region in Sichuan, have made a promise that they will secure the supply and control the costs and no increases in prices.
Hebei Province is asked to supply 80,000 prefabs, which need 10.84 tons of colored steel. Tangshan Iron and Steel Group Company Ltd, Handan Iron and Steel Group Company Ltd and other 7 companies will be in charge of steel supply.
Meanwhile, the companies have promised to secure a higher quality of the steel.

The Shanghai Futures Exchange (SFE) was ready to launch steel futures while the studies on oil futures and copper option were also made a stage progress, the SFE director Wang Lihua unveiled at the 5th Shanghai Derivatives Market Forum.
He added transaction amount in the SFE has jumped to over 23 trillion yuan in 2007 from 6 trillion yuan in 2003. The exchange concluded over 9 trillion yuan during January to April of 2008, up 52% year-on-year with an account number of nearly 400,000

Rising raw material costs for steel have pushed prices higher and with a lack of liquidity in the financial system projects in Asia are being put on hold, industry leaders told a conference.

Infrastructure projects, in which steel is one of the main items, are being delayed. Steel expansion or new steel schemes are expected to be cut back in other parts of the world.

“Vietnam has been affected, but also India, there are projects that are being put on hold now,” said M. Shaad, commercial manager at metals trading firm Global Allianz UK Ltd.

Speaking on the sidelines of this week’s Bureau of International Recycling Conference (BIR), Shaad said that trading partners in his main market India suffered from a tightening of credit for purchases of metals and scrap metals.

“In Vietnam it is purely because of the credit crunch,” Shaad said, referring to bankers being reluctant to lend money due to a lack of liquidity in the global economic system.

Difficulty in financing steelmaking and scrap processing operations was seen in the United States with lenders reluctant to increase credit lines, Jeremy Sutcliffe, Chief Executive of metals recycler Sims Group, told the conference.

This is going to be an increasing problem, as steel buyers find that existing credit facilities are insufficient to finance their ongoing requirements. With steel costs doubling and banks reluctant to extend further credit facilities, companies are going to find it increasingly difficult to fund the stock they need to keep manufacturing running at optimum levels. This will not only affect Eastern economies, but those of the West too.