Cement and Steel hold July 2025 core sector growth at 2.03%

21 Aug 2025 , 01:03 PM

JULY CORE SECTOR AT 2.03%, LOWER THAN REVISED JUNE NUMBER

Core sector growth for July 2025 at 2.03% may be lower than the 2.20% core sector growth in June. However, the June core sector was originally reported at 1.71% but was revised up by 49 bps to 2.20%. In comparison, the July core sector growth appears lower, but we need to factor in upward revision in July data in the coming month. It must be said that the core sector for the first 4 months of FY26 at 1.58% is definitely lower than the comparable 4 months for the last 2 financial years, when the core sector growth was above 6%. However, that is more due to the capex slowdown in FY26.

CORE SECTOR LEADERS AND LAGGARDS IN JULY 2025

A total of 4 out of the 8 core sectors saw contraction in July 2024. In the core sector basket, refinery products have the highest weightage of 28.04%, followed by electricity at 19.85% and steel 17.92%. Of these 3 sectors, electricity grew 0.54%, Steel grew 12.77%, while refining contracted -1.05% in July 2025. Cement continued to show smart traction in July at 11.74% hinting at a boost to construction. Apart from refining, the other 3 sectors to see contraction in July were Coal -12.27% (due to extended monsoons), Natural Gas -3.21%, and crude extraction -1.31%. Supply chain challenges remain elevated.

BREAKING DOWN JULY 2025 CORE SECTOR GROWTH

The table captures breakdown of the +2.03% yoy core sector growth for June 2025 across 8 infrastructure baskets. Previous data points have been revised, appropriately.

Months	Overall (%)	Coal (%)	Crude (%)	Natural Gas (%)	Refinery (%)	Fertilizers  (%)	Steel  (%)	Cement (%)	Electricity  (%)
Jul-24	6.27	6.82	-2.92	-1.27	6.62	5.31	6.99	5.12	7.94
Aug-24	-1.45	-8.05	-3.44	-3.61	-1.03	3.15	4.13	-2.53	-3.72
Sep-24	2.44	2.64	-3.87	-1.30	5.76	1.89	1.81	7.58	0.49
Oct-24	3.84	7.76	-4.85	-1.25	5.20	0.37	5.71	3.14	1.96
Nov-24	5.78	7.49	-2.12	-1.94	2.90	2.02	10.54	13.10	4.42
Dec-24	5.09	5.29	0.65	-1.76	2.83	1.67	7.31	10.32	6.17
Jan-25	5.08	4.64	-1.14	-1.51	8.31	2.96	4.73	14.30	2.30
Feb-25	3.36	1.65	-5.17	-6.04	0.75	10.24	6.85	10.71	3.63
Mar-25	4.51	1.64	-1.90	-12.74	0.20	8.83	8.69	12.22	7.49
Apr-25	0.99	3.46	-2.75	-0.94	-4.50	-4.16	4.38	6.34	1.75
May-25	1.19	2.76	-1.80	-3.56	1.06	-5.89	7.44	9.65	-4.71
Jun-25	2.20	-6.81	-1.21	-2.77	3.36	-1.19	9.71	8.16	-1.21
Jul-25	2.03	-12.27	-1.31	-3.21	-1.05	2.02	12.77	11.74	0.54

Data Source: DPIIT (Department for Promotion of Industry and Internal Trade)

Let us look at some of the key performers and pressure points. Once again, oil extraction and natural gas were hit by supply chain issues and policy constraints. Coal output contracted -12.27% due to prolonged monsoons, although electricity supply showed a recovery in July 2025. On the upside solid traction in steel and cement can be attributed to a sharp revival in construction and infrastructure demand. The growth in core sector would have been better had refineries not shut down for routine maintenance. Out of the 8 core sectors, in the case of steel, and cement; July 2025 output is better than the average of last 12 months. In other cases, it is flat or lower.

HIGH FREQUENCY CORE SECTOR GROWTH (JULY 2025)

While regular yoy growth captures long-term trends, high frequency MOM data captures short term trends.

Core Sector Component	Weight	Jul-25 (YOY) %	Jul-25 (MOM) %	FY26 Cumulative (%) #
Coal	10.3335	-12.27%	-17.67%	-3.05%
Crude Oil	8.9833	-1.31%	+2.86%	-1.70%
Natural Gas	6.8768	-3.21%	+2.44%	-2.60%
Refinery Products	28.0376	-1.05%	+2.31%	-0.29%
Fertilizers	2.6276	+2.02%	+6.95%	-2.20%
Steel	17.9166	+12.77%	+3.35%	+8.54%
Cement	5.3720	+11.74%	-9.13%	+8.89%
Electricity	19.8530	+0.54%	+0.59%	-1.00%
Core Sector Growth	100.0000	+2.03%	-0.72%	+1.58%

Data Source: DPIIT (# Apr-Jul data)

The high frequency MOM core sector growth contracted marginally by -0.72% in July, less than the June contraction. In July, the MOM contraction of -0.72% is largely on account of coal and cement. The other 6 sectors showed positive high frequency momentum in July 2025. The problems in the coal sector appear to be a lot deeper with the high frequency and the yoy numbers deep in the negative.

CHARTING LONG TERM STORY OF CORE SECTOR GROWTH

The cumulative core sector growth in first 4 months of FY26 stood at a tepid 1.58%. This is sharply lower than the growth of 6.3% in Q1FY25 and 6.6% in Q1FY24! High base effect is only part of the answer. The real reason is the absence of private sector in capex, despite sitting on record cash flows. Over the last 13 years, the average core sector growth stands at 4.0%; and if the COVID year (FY21) is excluded, the average stands at 4.9%. The Q1FY26 core sector growth at 1.58% is  a clear indication of infrastructure output not living up to the mark. If capex has to come from the private sector, there are two conditions. Firstly, there has to be policy support. Secondly, the government must have a Plan-B to convert the tariff crisis into a capex goldmine. Only time will determine that.