1. Why 2027 Is the First Real Compliance Year

The CBAM transitional period ended on 31 December 2025. The definitive period began on 1 January 2026, but 2026 is best understood as a data and verification build-up year: the purchase obligation does not bite immediately, while the financial settlement pressure concentrates in 2027.

Two dates define 2027 for steel tube exporters:

1 February 2027: CBAM certificates go on sale; EU importers begin purchasing certificates corresponding to the embedded emissions of imported goods.

30 September 2027: the first annual declaration is due, covering 2026 imports and their embedded emissions. In practice, every tonne of 7304 / 7306 tube shipped to the EU in 2026 must have its emissions declared and certificates surrendered by that date.

2027 is therefore the year in which CBAM moves from reporting to paying for steel tube exports.

2. CN 7304 and 7306 Are Covered in Full

Both 7304 (seamless tubes, pipes and hollow profiles) and 7306 (other welded tubes, pipes and hollow profiles) fall within the CBAM iron and steel scope, and the coverage is at whole heading level, not limited to selected sub-codes.

This means seamless tube (7304), welded tube (7306), line pipe, casing and tubing, precision tube and galvanised tube are all in scope whenever they are classified under 7304 or 7306. There is no sub-code carve-out that removes a particular tube product from the CBAM obligation.

3. How the 2027 Carbon Cost Is Calculated: Default Mark-Up Plus Free Allocation Adjustment

The CBAM cost borne by the importer depends on four variables: embedded emissions × import volume × certificate price × free allocation adjustment factor.

3.1 The 20% default-value mark-up

If the exporter cannot supply verified actual emissions data, the EU importer is pushed onto the Commission’s default values. These default values are already conservative, and a punitive mark-up is layered on top during 2026–2028:

2026: default × 1.10

2027: default × 1.20

2028 onwards: default × 1.30

For steel goods, including 7304 and 7306, the 2027 mark-up is 20%. This means a tube exported without verified data is treated as emitting 20% more than the default baseline, directly increasing the importer’s certificate bill and eroding the competitiveness of the Chinese tube against suppliers who can provide actual data.

3.2 Free allocation adjustment: the CBAM factor drops to 95% in 2027

CBAM does not charge on 100% of embedded emissions from the outset. The charge is adjusted to reflect the free allocation still enjoyed by EU producers, through the CBAM factor:

2026: 97.5% (only 2.5% of emissions effectively charged)

2027: 95% (the charged share rises to 5%)

2034: 0% (full 100% coverage)

In 2027 the charged share doubles from the 2026 level. Combined with the 20% default mark-up and certificate price movement, the effective carbon cost per tonne of tube rises materially year-on-year.

3.3 Illustrative 2027 default values for 7304 and 7306 sub-codes

Default values vary by country of production and production route. The following 2027 figures (including the 20% mark-up, in t CO₂e per tonne of product) give a sense of the cost benchmark:

CN code	Description (short)	2027 default value (incl. 20% mark-up)
7304 59	Seamless tube, other alloy steel, not cold-drawn/rolled	9.432
7304 90 00	Seamless tube, non-circular cross-section	9.852
7306 19 00	Welded line pipe, non-stainless	9.900
7306 30 49	Threaded welded tube, circular, not galvanised	9.900
7306 30 72	Galvanised welded tube, OD ≤ 168.3 mm	9.900

For many 7304 and 7306 sub-codes, the 2027 default value sits at or near 10 t CO₂e per tonne of tube. At an illustrative certificate price of around €75/t CO₂e, the default-value CBAM certificate cost alone can approach several hundred euros per tonne, before applying the 5% charged share in 2027 and any price movement in EUAs.

A further practical issue is that the default-value route can misclassify lower-carbon producers. Where the Commission’s reference route does not reflect the actual production pathway (for example, an electric-arc-furnace producer being assigned a BF-BOF default), the exporter is penalised not for higher emissions but for the incompleteness of the default table. For Chinese tube exporters using lower-carbon routes, verified actual data is the only way to correct this distortion and avoid paying on a default that overstates their carbon intensity.

4. What Tube Exporters Must Deliver for 2027

The legal CBAM declarant is the EU importer. But the embedded emissions data can only come from the producing installation. Without factory-side verified data, the importer either cannot declare or must fall back to the default value with the 20% mark-up. The minimum compliance package for 2027 exports includes:

A monitored installation plan: defining the boundaries of the tube production facility, emission sources and data collection methods, covering the process from input (billet, strip, skelp) to finished tube. The plan must be updated when production lines or processes change materially.

An annual emissions report: consolidating energy and material consumption records and calculating embedded emissions per tonne of tube, by CN code functional unit, with traceable and verifiable source documents.

Third-party verification by an accredited CBAM verifier: the transitional-period spreadsheets are no longer sufficient. The emissions report must be verified; without a verification report, the importer cannot use actual values and the 20% default mark-up applies.

Delivery of the verified data package to the EU importer, who files the annual CBAM declaration. Exporters may also assess whether any carbon price effectively paid in China can be claimed as a deduction, but the evidentiary threshold is high and requires complete, CBAM-compatible carbon payment records.

5. Strategic Implications for Chinese Tube Exporters

2027 is not the beginning of CBAM, but it is the year in which the cost becomes explicit and unavoidable. Exporters that did not build an emissions data system during the transitional period will face a 20% default mark-up in the first settlement cycle, either conceding margin or losing orders to suppliers with verifiable data.

The practical priorities are:

Map the highest-volume 7304 and 7306 sub-codes first and build emission factors at sub-code level, rather than treating “steel tube” as a single category;

Complete verification on 2026 data so that the EU importer holds usable actual values before the 30 September 2027 deadline;

Integrate CBAM certificate cost into EU pricing models, comparing the actual-value route against the default route, and use that comparison in negotiations with EU customers;

For tube lines using EAF or lower-carbon processes, proactively submit actual data to correct route misclassification in the default table, so that lower-carbon tube is not penalised as if it were high-carbon.