If their prices are high, why are you buying from them?
I know you were talking to Jeff B, but saw this article which might be of interest:
The Rise And Fall Of 9MM Ammo Prices During COVID; What's Next?
Op-Ed via The Machine Gun Nest (TMGN).
The Machine Gun Nest has been open since 2015, but we've been in the firearms industry since 2013. Earlier than that, Rob (one of the owners) has been collecting guns since the early 2000s. We've seen panic buys, ammo prices fluctuate, and firearms banned and unbanned.
March of 2020. The COVID19 pandemic hits the United States. Many people (like myself) were aware of the situation in China and had time to prepare for the worst adequately. Many people were caught completely off guard.
Many things led to the recent panic buy, but most of it is related to COVID. Many people thought that the world was going to end. So many people "woke up" to the idea that they may have to fend for themselves and that no one was coming to save them. This change of mentality led to an
explosion in firearms and ammo sales.
Weirdly enough, the price of ammo didn't have an immediate rise at the beginning of the pandemic. It was summertime before we started to see a real spike in price. Prices averaged
$0.20 a round for 9mm until July. Then we began to see prices rise to an average of about
$0.30/per round.
The price rise could be attributed to the BLM protests, counter and subsequent riots that followed, which were viewed widely across the internet and traditional media. There were depictions of innocent people getting hurt or worse, swarmed by protestors, with no police anywhere to help.
This led to a panic buy on top of a panic buy. Whereas previously, shelves had been scarce, they became empty. People started to hoard ammunition like they had been hoarding toilet paper. Since manufacturing companies were set up to meet the average demand of the "Trump Slump" of the previous years, where gun and ammo sales had been low, there started to be bottlenecks in ammunition production. Ammo manufacturers were not prepared for the sharp increase in buying.
In August 2020, we started to see prices increase even more as ammo became harder to come by. 9mm saw an average of
$0.50/ per round. Major manufacturing companies started to report that they had accumulated millions of dollars in backorders. We tried to place a substantial order for ammo and were straight up told that there was no way that we'd get it within the year or next.
Speaking to some of our friends, we gathered that there was a
shortage of primers. Primers are the component within ammunition that ignites the gunpowder to expel the projectile from the bullet & firearm when struck by the firing pin. For those that don't know, primers are incredibly dangerous to produce. The manufacturing process sometimes results in death. Primers are typically the bottleneck in the production process for ammunition. A shortage of primers caused by high demand and supply chain disruption continued to help drive up the cost of ammo.
We luckily found an importer who had bought 1M rounds of Turkish 9mm. We were able to work with him to import the ammo, and that saw us through the worst of the shortages. Unfortunately, we were victims of circumstance (like everyone else) and had to pay a high cost per round to acquire the ammo.
After the 2020 election, we saw prices rise again to an average of
$0.60 per round. To give you an idea of what that means- a box of ammo is 50 rounds typically. That's about 3-5 magazines, depending on how many bullets you load. 9mm is meant to be an inexpensive round. It's relatively cheap to produce, and its popularity has a lot to do with that fact. When you have people paying $30 ($0.60 per round) for a box of 9mm, as opposed to $12 (0.24 per round) eight months prior, shooting starts to get expensive, especially since the average range trip equates to about 2-300 rounds per caliber.
Consider this as well; statistics show that in 2020 alone, 23 million firearms were sold, with 6 million of those guns being bought by first-time gun owners. Suppose each of those new gun owners wants to buy enough ammo for an average range trip, 200 rounds. In that case, those people would need 1,200,000,000 rounds of ammo to satisfy the demand, and that's not even including the 32% of Americans that own guns (According to Gallup polling.) That would be about 104,960,000 people if you were wondering.
So, to satisfy that market, if each of those 104.9 Million people wanted only 200 rounds of ammo for one firearm, the amount of ammo needed would be serious. (and we know that people, in reality, want thousands of rounds per firearm). That's not including law enforcement contracts and military contracts, which usually take precedence over the civilian market.
Finally, in Jan. of 2021, we seem to reach the peak. With the Jan. 6th protests and Biden's inauguration, gun and ammo buying hit new highs. 9mm prices on average hit
$0.71 per round. During this time, we regularly heard from customers that other spots were selling 9mm at
$1/round.
At the time of writing this (September 2021), we're just now starting to see a drop in ammo prices and gun sales slowing down.
9mm is sitting at $0.31 per round for steel case and $0.34 per round for brass on the low end. Any well-known brand names are sitting at around $0.39 per round. Even with Biden's new "
Russian Ammo Ban," prices seem to have steadily fallen, at least on 9mm.
The real question is, will the prices keep dropping? It's anyone's guess.
There's a ton of factors affecting the market right now, from unrest around the world. For example, earlier this month, a coup in
Guinea sent Aluminum prices to a ten-year high. If you're unfamiliar, Guinea holds a quarter of the world's bauxite supply, a raw material that can be refined into alumina, which can then be smelted into aluminum.
This price change can affect the cost of firearms, as manufacturers will have to pay a higher price to acquire raw materials.
Shipping and transporting are another problem now, with sea
containers fetching record-high prices because of a shortage and supply chains still seeing significant disruptions.
Since the panic buy for firearms has at least subsided a little bit, people have stopped hoarding ammo and are choosier. We're seeing this in gun sales right now where customers aren't coming in and just buying anything on the wall. People are starting to do their research and are becoming pickier about their buying. I think this is the same for ammo as well. The demand has subsided a bit. If supply continues to meet demand, I think we'll continue to see a drop in prices. Barring some mutation in covid that gives the virus a 50% CFR, more supply chain disruptions, or the Biden administration passing some severe gun control legislation, I think we will continue to see the price of ammo dropping slowly.
The Rise And Fall Of 9MM Ammo Prices During COVID; What's Next? | ZeroHedge
