After braving covid-19 the global textile sector faced an even tougher year in 2023. Almost all textile-producing countries suffered a fall in production and per unit price. Now textile players in many countries are expecting a turnaround going forward.
The global demand in 2023 was low and retailers were sitting on high inventories that further depressed new orders. Many in India, Bangladesh, and Vietnam, and some in Pakistan think that the worst is over and new orders would start landing in their production facilities. The Pakistanis are less sure because of the internal disturbances and weak economy of the country.
Textile players expect demand to pick up again by the third quarter of FY24 as global retailers reduce their inventories. They know that the rest of the year 2023 would also remain bearish and perhaps the first two quarters of 2024 as well. But they are highly optimistic that the demand will pick up again by the third quarter of FY24 as global retailers reduce their inventories. Trade volumes are expected to improve further in the second half of FY24 as global retailers start giving orders for their Summer/Spring 2024 collections, some market participants pointed out.
A host of factors including competitor countries staring at geopolitical uncertainties are seen adding colour to the sector. With this, textile players are in for consistent earnings growth and improved cash flows. Indian textile players are for instance set to leverage their expanded capacities. Moreover, falling cotton and crude prices are likely to bolster margins and enhance India’s competitiveness in export markets. Bangladesh and Vietnam are hoping to bolster their exports by moving into higher value-addition textile categories and expanding their product base. Pakistan’s apparel sector hopes that its past performance of delivering export consignments on time during the worst circumstances would keep the global brands attracted to the Pakistani market that matches global quality with lower prices.
The Bangladeshi and Vietnamese exporters and to a lesser extent Indians hope that the China+1 push picking up pace, significantly raising the possibility of recalibrating earnings and multiples for the sector. Pakistanis are not in high value-added apparel league and are expecting higher orders in the fields they are serving the global apparel markets.
The major worry in Pakistan however is the spinning industry that might need a financial push to revive. That push may not be forthcoming which would make the revival of 30 percent closed industry impossible.
Asian textile players hope for a turnaround in Q3FY24
