The short answer is “yes” and I think the forecast bears some explaining. First, there was massive demand due to civil unrest and Biden winning the presidency making people fearful of more gun control via regulations and executive orders. Second, there was a general concern about COVID and self-defense due to various “defund the police” movements at the same time that crime was increasing due to liberal policies reducing prosecution and incarceration. These factors all pushed existing gun owners to buy both more firearms and ammunition while at the same time creating a very definite increase in new first-time gun owners. In short, this all put demand for ammunition through the roof.
Why did prices increase?
While demand was increasing, factories, suppliers and distribution firms were all sorely short-staffed due to COVID. Making this even worse was the government paying people to stay home which continues to affect staffing levels – a lot of people simply do not want to work. The politically correct term many use is “we are having supply chain issues” meaning the vendor you want to buy from is having a hard time finding raw materials or components causing delayed shipments, higher prices and general uncertainty about what will happen next.
If we look at these two forces coming togeter – increasing demand and shrinking supply, prices went up and availability went down. For a brief while, you could not even find 9×19/9mm Luger FMJ range ammo unless you were willing to pay $0.40/round or more of sites like Gunbroker.
Why are prices going down?
Now over the past year, what has happened? Prices for 9mm ammo have steadily gone down and now dipped well below $.030/round and will continue downwards. Now why can I say that? We’re going to look at factors influencing demand and supply at this point.
Demand Side Factors
These are things that happened to influence whether people buy ammo or not:
First, inflation – the increase in prices you pay – is hitting everyone hard. People are making hard decisions about whether to buy ammo, food, gas, fix something at home, repair the car … in these scenarios, ammo is often put on hold because you can’t drive or eat a case of ammo. This is causing demand to go down.
Second, panic buying is dropping. Gun owners can only panic buy for so long and then they either run out of money to spend or they feel they have enough / are safe enough and then stop. Again, this causes demand to go down.
Third, all things being equal, if ammo costs you a fortune, are you going to frivolously go and shoot tons of ammo at the range or are you going to conserve it a bit more? Or to put it differently, are you going to waste a case of ammo that cost you $300-400 just to have fun or will you maybe shoot a bit less and save the rest for another day? A lot of folks will respond with the latter and not shoot more than is necessary. Again, this causes demand to go down.
Supply Side Factors
Now let’s look at the supply side – what influences groups to sell ammo:
First, the major US ammo makers are running their plants non-stop trying to make ammo. For example, Vista Outdoor, the holding company who owns CCI, Federal and Speer bought the Remington ammunition plant and brought it back online and has it up to speed now. Why are these groups doing this? Well, they exist to make a profit and when prices are high, they can afford to invest to do just that – to make money. This is also why Palmetto State Armory has spent over $100 million to bring their AAC ammo plant on-line – to make money. So what does all of this do – these producer actions increase the supply of ammo in the market.
Second, not only did the bigger firms try to produce more but lots of smaller firms either started or are trying to scale up to to meet demand and make money. Some examples include Ammo Inc , Frontier, Gorilla and Sergeant Major. The result is an increase in the supply of ammo.
What else is going on? Well, importers are bringing in tons of ammo (literally). This includes established brands like Aguila, Eley, Fiocchi, IMI Systems, Lapua, MagTech, Norma, MEN, PMC, S&B, brands of ammo I have never heard of before such as Belom, DRZ, STV Scorpio and Turan. The increased prices created an opportunity that made it worth the time and investment needed for foreign suppliers to make and sell the ammo as well as for importers to bring it in by the container load and this all increases supply.
Fourth on the list, I notice vendors are finally advertising they have primers, powders and other reloading components back in stock. For ammo buyers who want to reload, or get back into reloading, they can which takes some buyers for finished ammo out of the market. This factor is both supply and demand related in a sense so I am just sticking it here.
The Result
In short, demand is contracting/decreasing and supply is expanding/increasing. When this happens, prices go down. To put it simply, you have more ammo chasing fewer buyers and so the sellers begin to compete on the basis of price – whether it is lowering the price of the ammo itself, throwing in free shipping or some per bundle “buy this ammo and get two free magazines” or even some combination.
As of my writing this post, I checked Ammoseek.com and the cheapest 9mm 115gr FMJ ammo in case quantity (meaning 1,000 rounds) is $0.24/round and the most expensive is $0.60/round — the $0.60 listing is from a single seller who appears to be premium pricing their Tula steel case. There’s quite a spectrum of prices for sure – quite a few sellers are offering sup $0.30 pricing. Far from its peak price but also far from it’s bottom before all of this happened.
By the way, due to its popularity, I have watched the pricing of 9mm FMJ case lots for a while now to judge how things are going. When you get into the unique wildcat calibers or obsolete/hard-to-find calibers they are different and my prediction doesn’t necessarily apply.
Government Regulation Risk
At this point, there doesn’t seem to be a huge risk of the government introducing regulations that impact the free market in terms of ammo. The ATF does have a new head and, in general, the current administration openly despises both gun owners and the firearms industry but they don’t have a ton of support for gun control at the moment. Granted they have more after all the public shootings as of late but hopefully it will not increase.
So this is my riskiest part of the prediction – at least through the mid-term elections the politicians and the bureaucrats they control are not going to want to rock the boat or they are apt to put some of the more conservative democrats from areas with large populations with firearms at risk of re-election. There are gun owners in all political parties at this point.
Conclusion
To sum it up, demand has shrunk and supply has increased. Vendors are starting to compete on the basis of price and this is driving down prices, at least for popular calibers, across the board.
We’ll see how my forecast holds up and I feel pretty confident about it.
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