Gunpowder shortage and the rising price of ammo

In 2024, everything is more expensive. Inflation has hit hard everywhere. Reasons are numerous. Sending out "free" money from the government during the pandemic certainly is a big factor impacting the value of the dollar now. Supply chain disruptions did a number on everything for sure. All sorts of realignments in the supply chain networks have been very disruptive. But now that pandemic is over, that should all be healing, right? The supply chains are back in action and functioning once again, right?

Well,…not exactly. For some, yes. But there is the small matter of that war Russia started in Ukraine. If you don't keep track of geopolitics and commodity investment stratagems, you may be among the majority of people who are unaware of how that conflict is affecting purchase prices everywhere for all sorts of things, from bullets to butter.

And as for bullets,…the West is supplying a lot of bullets to Ukraine. And that has been not as easy as you might think. Because Ukraine was in a unique and weird point of transition when the war kicked off. They were in the middle of converting over from the weapon systems of the former Soviet Union that they had in inventory from 30 years ago when they declared their independence to newer systems interoperable with their western neighbors in Nato whom they trusted more and preferred doing business with. So alongside the Combloc calibers of 5.45x39, 7.62x39 and 7.62x54R for most of their small arms, they now also used 5.56Nato, 7.62Nato and .50BMG in their newer small arms that were beginning to replace the other stuff. It has been a logistical nightmare!

What the West had most readily on hand to offer Ukraine was stockpiles of NATO-standard ammunition to feed the NATO caliber weapons Ukraine had been manufacturing and buying.  And that certainly helped. But as the war went on, the consumption rate of ammo was so high that before long, Ukraine was beginning to get close to exhausting their on-hand stockpiles of Combloc ammo. The West didn't have vast stockpiles of that, so in addition to trying to buy up supplies from other countries that still made them (which was difficult, since most were still aligned with Russia), the West needed to start production for those calibers themselves, in order to ultimately deliver sufficient supplies to Ukraine. And this was done by contracting with the commercial civilian ammunition fabricators and suppliers.

And so firms such as Lapua in Finland, Sellier & Bellot in Czech Republic, Fiocchi of Italy, RAUFOSS of Norway, Norma of Sweden and many others who made and sold sporting ammunition commercially for the civilian market, but whom also had various military contracts in their respective NATO countries of origin, were contracted to immediately start producing  small arms ammo in those Combloc calibers. The need was urgent and time was short, so civilian sporting ammunition was abandoned for the time being. 

And at the same time here in the U.S., it had only been a short time after the Global War On Terror had ceased, along with our heavy rate of ammunition consumption for that endeavor. We were taking all this war reserve stock of ammo and sending it to Ukraine,…but we hadn't really had enough time to deeply restock our own bunkers to bring them back up to appropriate levels. So Winchester, who currently runs Lake City Ammunition Plant on contract on the Pentagon's behalf, was suddenly tasked with ramping production back up to max levels.

All of this combined has begun to affect the easy availability of certain calibers and ammunition in general for you and me, affecting the prices. Most obviously, for those with AK-74 or AK-47 rifles, 5.45x39 ammo is through the roof right now (if you can find it) because that is the main rifle round used in Ukraine. And while 7.62x39 is not quite so bad, all that cheap surplus 7.62x54R you used to rely on is gone forever. That feeds the belt-fed machineguns in Ukraine, and there is never enough of it.

But it gets worse.

The markets for essential industrial commodities prior to globalization were essentially regional. If your country needed to buy materials such as iron ore, oil or agricultural products like corn,…they were usually sourced within relatively close proximity to your borders. This was because those supply chains were only secure if your nation could protect them via their regional military security influence. But after WW2, when America chose to be the world's policeman, patrolling the world oceans and imposing order,…it became possible for nations within America's good graces to trade globally. And suddenly you could trade anywhere for anything with anyone and have safe uninterrupted shipping from pirates or warring nations. And when the Soviet Union collapsed, all the commodities within the former communist bloc were available on the world markets, and there was bountiful and plentiful resources for everyone. Thus, certain commodities for the manufacture of ammunition became cheaper if sourced from China or Russia or Ukraine, such as cellulose.

Cellulose is one of the key ingredients of nitrocellulose. And nitrocellulose is the key ingredient of modern gunpowder and various other propellants for artillery and rockets.

Cellulose is the main substance in the walls of plant cells, helping plants to remain stiff and upright. Cellulose is made from all sorts of organic plant material. Paper is essentially cellulose made from trees. But cellulose can be made from something as simple as grass trimmings or shredded plant material of nearly any type. But at an industrial scale, the cheapest and most uniform source for cellulose is waste scrap from agricultural harvesting. Popular choices, depending on the source region include cotton, rice husks, wheat chaff, corn stalks, lumber processing sawdust, etc. But largest and cheapest and most reliable of these sources globally for the last 30 years has been rice husk remnants from China, and wheat and sunflower stalk remnants from Ukraine.

But Ukraine isn't able to harvest very much during the war. Not only that, but processing of the products can't always be done locally before being shipped anymore, with a lot of agricultural processing happening at destinations outside of Ukraine. In fact, Russia has specifically targeted Ukraine's agricultural output, both to starve the population and to reduce economic income. So that source has been cut off. Not just for Ukraine's own nitrocellulose production, but for much of the West as well, who had been depending on Ukrainian cellulose for a couple decades. And China, having sided with Russia, has cut off all rice-based cellulose supplies to the West, instead diverting that supply to Russia to aid them in keeping their ammunition lines operating. Thusly, the previously cheap and reliable and handy supply for nitrocellulose for the ammunition factories of the West has been interrupted.

Ah, you say, but cellulose can be made from agricultural waste scrap anywhere. Just scoop up all that from the American plains full of wheat and corn and cotton and keep chugging. Well, yes, there is indeed plenty of cellulose around the world and right here at home. And eventually the nitrocellulose supply chain for the western world's propellant manufacturers will indeed resume. But it will never again be as cheap as it was. And, more importantly, changing out a supply chain for another is not such a simple thing. It takes time. New processing plants need to be built. New relationships forged. There is also a learning curve for the biochemistry techs who need to be trained up.

All of which is to say that, for now, the West is operating mostly on its pre-existing stockpile of gunpowder it had on hand before the war in Ukraine kicked off. And until domestic harvesting and distribution of processed cellulose is secure and up and running, the military industrial complex is quietly in panic and desperately hoping nothing serious kicks off before that supply chain matter is resolved. Not just here in the U.S., across most of the planet.

And here's a dirty little secret you may not be aware of;…most of the gunpowder available commercially for us American sportsmen who craft our own ammunition, and even for most domestic civilian ammunition manufacturers,…is actually surplus production powder from foreign propellant factories. Primarily Europe. That's because keeping an armaments industry active and ready to suddenly ramp up and supply whatever is needed for a war is an expensive endeavor. More importantly, the skills needed to operate such an endeavor can be lost if continuous production were to cease and shut down. Which is why most of the civilian sportsman ammunition factories throughout the world are partnerships with their home nation's military. The small civilian production rate keeps everything oiled and running and ready to ramp up if/when needed. Thus, the propellant factories are always producing batches of powder that are usually sold to civilian consumers. And the single largest such market like that, is right here in the good ol' USA.

But for now, that is all over. All of Europe is panicked over Russia, especially since NATO countries have been lying to themselves for over 20 years that the Bear was no longer hungry. So they kept spending less and less on guns and bullets. They are now acutely aware they are very insufficiently armed, which is why they are supporting Ukraine so heavily, to keep the Bear bottled up and occupied there so he won't invade elsewhere. Thus, nearly all ammo production capacity is offline for us here in America.

As a result, we handloaders who assemble our own ammunition from components, began to see before the beginning of this year that gunpowder prices were rising rapidly. Prior to the pandemic, a pound of powder sold for about $20. A year ago it was $30. Today, we are paying nearly $45 retail, and it keeps rising, soon to break $50. The powder suppliers have warned that within a year, it could get as high as $100 per pound for the more popular and in-demand selections. And this affects not just us handloaders, but the entire domestic civilian ammo industry as a whole.

So in short,…your ammo selections at retail and wholesale are going to go up, and already are. And we haven't even taken into consideration yet the possible outcome of the election!!

Oh dear Lord!