Let me start off by saying I HATE panic vendors.
You know who these guys are, they’re the ones out there sending emails and posting to social media TRYING to create panic in order to sell more ammo. I’m not one of them. Instead, I want to give everyone a more level headed view on the ammo industry from the perspective of a company that buys 5.3 million rounds of ammunition PER MONTH – a company with direct access to major brands in the ammunition industry. We’re not a mom and pop or small internet retailer but one of the top 10 commercial ammunition buyers in the US.
An Uneven Ammunition Market
They say you should never bury the lead, so I won’t.
If I had to characterize the current state of the ammunition industry: I would say it is “uneven”. We’re seeing supply tighten, prices rise, and shipment lead times get longer. There are no calibers that are truly out of stock like we saw with 2020, but manufacturers are cycling more through SKUs and prioritizing certain ones at different times. Deliveries are happening regularly, but in lower amounts with some products on backorder. Also, as you would expect with the rising cost of raw materials, manufacturers are raising prices on an annual and semi-annual basis, typically in the 3-10% range as their costs increase.
We’ve all seen periods of either higher demand, lower supply, or both. Our most recent collective memory is that of the black swan event starting in March 2020 that had both extremely high demand and artificially low global supply due to raw materials and factory shutdowns. We are certainly not seeing anything like that today.
Today, we have three drivers that really boil down to one: powder is tight. At the commercial level, we’ve been hearing about this for months now. It has been a big slow moving freight train that has now been accelerated by a war in Iran and shifting military priority. We also have a strike at Lake City that isn’t helping matters.
Lake City Army Ammunition Plant manufactures ammunition for the military with overages going into the civilian market. Primary calibers include 5.56, 7.62 and 50 BMG. With a strike and higher military demand that equates to less production available for civilians. It practice, it means other companies will jump in to pick up the slack (capitalism working its magic) but it will take time and prices will undoubtably rise.
On the demand side, things are normal or even slightly down (unless those online fear mongers are successful in freaking people out). The only real increase in demand has come out of Virginia with looming assault weapon and magazine bans causing folks to stock up.
As far as ammunition production capacity goes, we have more than we did in 2020 and there are certainly no factories shut down thanks to a “scamdemic”. Which is likely part of the problem: most of the investments have gone into ammunition production and not powder or primer production, hence a tighter powder market.
Fiocchi USA added $15m of capacity in Little Rock. Unfortunately the $41.5m primer facility Fiocchi USA announced in 2022 was scraped.
On the other hand the $70m expansion White River Energetics who makes primers and powder, is up and running (and hiring) in Des Arc, Arkansas. We also have an announcement that General Dynamics St Marks will expand ball powder production by 20% due to increased demand.
CBC / Magtech is building a $300m plant in Oklahoma that will include all components including powder and primers. So that will take some pressure off as well.
Most of the other new capacity appears to be focused on military use: $150m Sig Sauer expansion for 6.8mm, Olin / Lake City also delivering 6.8mm to the military.
AAC’s powder shortage and temporary ammo production closure are well known. They have stated on social media that they intend to build or buy a powder production facility in order to resume production. If that happens it won’t be until later this year at the earliest.
Nitrocellulose and Domestic Production
The powder problem has been building for years now. It is not something that just happened overnight. Even going back to 2024 when Idaho Senators Mike Crap and Jim Risch introduced the Ammunition Supply Chain Act in order to help create a more stable supply of nitrocellulose, nitroglycerine and certain types of acid used in ammunition production. We just don’t have enough domestic production to meet current military and civilian demands. So powder is the bottleneck in ammunition production, pure and simple.
Even our gay neighbors to the north, Canada, is concerned about future nitrocellulose needs. They recently announced a $355.7 million investment for a nitrocellulose factory to help avoid future bottlenecks. Keep in mind those are Canadian dollars… so at least twelve dollars US.
Bottom Line
So the main takeaway is not that there is an ammo shortage – there isn’t one. We all saw that in 2020 and we know what that looks like. Instead we’re starting to see a “choppy” or “uneven” ammo market thanks to tight supplies of powder. Nothing is out of stock on a national level. Ammo is still available and in some cases even plentiful, depending on caliber. But as we progress and until there is some relief, you’ll see more of this out in the wild:
- Some brands or caliber variations may be out of stock at your local gun store or online.
- More SKUs will be limited in quantity, on backorder, or just delayed.
- Prices pushing ever higher, could be in spits and spurts or just slowly and consistently.
- Rumors and fear porn get people worked up which makes the cycle worse.
The best option, as always, is to ride it out with your current supplies and not run out to panic buy. If you are an AmmoSquared customer then you are in good hands…
For AmmoSquared Customers
Our business is built on the simple idea that you can sock away ammo for a rainy day and then get it when you want it. While we’re not in a downpour, it is starting to sprinkle. Good thing you have an umbrella with AmmoSquared!
As you know, our goal is to help eliminate ammunition shortages and have 1 Billion rounds of ammunition stored by 2035. We currently have over 25 million rounds of ammunition stored to help our customers smooth out uneven market conditions like we’re seeing today.
What we can’t control, however, is when manufacturers produce and send us our outstanding orders. As I mentioned above, we currently purchase 5.3 million rounds per month on behalf of our customers. That is a lot of ammo! We spread that across dozens of manufacturers and distributors. When we start seeing longer than normal delays for things we have a number of levers we can use to help keep the flow of ammunition running smoothly.
One of those levers is our proprietary Allocation System.
This is the heart of our process and something you won’t even notice in normal times. Once the market gets a little choppy, however, our allocation system kicks in. This is like traction control for a car. In a nutshell it just means that Autobuys will continue to run for your ammo selections but now they’ll spend more time in “Pending”. This gives us time to make sure we have the ammo in the warehouse before we allocate it to your account. During 2020 we had some calibers that spent months pending because they weren’t being produced. We just couldn’t get new inventory for hard to find rounds. Today is not like that, and we’re seeing most allocations spending a few days in Pending as we confirm the inventory, or get a new truck in, and move it over to our customers’ accounts.
We have other levers that we use to help keep ammunition flowing which I’ll link to in an FAQ “How does AmmoSquared manage an ammunition shortage” instead of going into details on this blog post.
Regardless of outside market conditions, we are here to help ensure gun owners have ammunition when they need it. Our customers can ship ammo that is already their inventory anytime (or even sell, as prices rise – another hidden benefit).
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