Export recovery

The July 2024 export industry report of Petroleum Securities Joint Stock Company (PSI) shows that in the first half of 2024, textile and garment exports recorded an export turnover of 16.2 billion USD, an increase of 4.4% over the same period last year. Of which, the US is still the main partner with a turnover of 7.1 billion USD, an increase of 2.5%, accounting for 44.2% of the export structure.

PSI sees a recovery in textile and garment exports, reflecting cooling inflation and a gradual recovery in consumer spending; orders in the first 6 months of 2024 from textile enterprises are more positive.

Textile fiber and yarn exports in the first half of this year reached 895.3 thousand tons, up 7.4% over the same period in 2023, with turnover reaching 1.96 billion USD, up 3.5% over the first 6 months of 2023.

"The positive recovery compared to the same period last year is due to the re-importation of companies to serve the 2024 autumn-winter crop; Chinese yarn prices increased again due to the recovery of oil prices. While the export value to China remained almost unchanged compared to the same period, reaching 1.04 billion USD, up 0.5%, there were more obvious improvements in the Korean and US markets, recording export values ​​of 233 million USD, up 20.8% and 95 million USD, up 31.1%, respectively.

Expect orders to continue to increase

Citing textile and garment enterprises, PSI said that the textile and garment industry is continuing to recover although demand is still low. Some enterprises with advantages in diverse customer base and ESG factors such as TNG or Eclat Textile (FDI Taiwan) have had their orders filled until the beginning of the fourth quarter of 2024. Meanwhile, MSH plans to put the new Xuan Truong 2 factory into operation from the end of 2024, showing the enterprise's confidence in the return of orders.

PSI believes that textile orders will continue to be secured and increase in the second half of this year.

"Therefore, we expect orders to continue to be secured and increase in the second half of the year when shopping season begins in major markets. We also see that in the first half of 2024, the total import value of production materials such as fibers, yarns and fabrics of all kinds increased by 20.7% and 11.9% respectively compared to the same period in 2023. This is a signal that the situation of textile and garment export orders is still quite positive and promising for the second half of 2024," said Mr. Nguyen Minh Quang - analyst of PSI.

According to PSI's report, the US clothing inventory in the first half of 2024 reached $2.172 billion, down slightly by 2.4% year-on-year and remaining lower than in the second half of 2022 and the first half of 2023.

Meanwhile, US retail clothing sales in the first half of 2024 increased slightly by 1.2% compared to the same period last year and continued the recovery trend from October 2023.

"We expect the US apparel retail market to maintain its recovery trend in the second half of 2024, especially during the year-end shopping season, thereby boosting new export orders," Mr. Quan said.

According to this expert, PSI sees that American spending is gradually recovering after inflation cools down. The US consumer confidence index in June 2024 reached 100.4 - within the same narrow range maintained over the past two years, which also reflects that consumer demand is still being maintained.

Therefore, PSI expects orders from textile and garment enterprises to recover significantly from the fourth quarter of 2024, when brands will also start preparing for the 2025 Spring-Summer crop.

However, PSI believes that the gross profit margin of textile and garment enterprises is unlikely to increase due to rising labor costs when the minimum wage increases by 6% from July 2024.

Thu An