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A theory- disproven?

Discussion in 'General Gun Discussions' started by FL-NC, Jun 2, 2021.

  1. FL-NC

    FL-NC Member

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    Theory: cost and availability of materials has resulted in the increases in ammunition prices
    I got an email from ammo.com advertising ammo in stock:
    1- Wolf 223, 55 grain FMJ, $500/1000
    2- Wolf 5.45, 60 grain FMJ- $300/ 1000
    3- Wolf 7.62 x 39 124 gr HP- $349/1000
    All 3 are made by the same manufacturer in Russia, using the same materials (lead and copper for projectiles, gunpowder to make it exit the muzzle, steel for the case, and a primer). The cheapest one (7.62 x 39) requires the most materials, along with the process to make the projectile a HP, but costs $150 less per 1000.. The one in the middle requires slightly more materials than the most expensive one (55 grains vs 60 grains) but is $100 cheaper per 1000 than the most popular and in demand caliber- 223.
    Also, keep in mind that the heavier an item is in weight, the more it costs to ship, with these shipping prices beginning at the point of origin.
     
  2. jmorris

    jmorris Member

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    wally, JCooperfan1911, GNP and 8 others like this.
  3. mcb

    mcb Member

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    You fail to realize the cost saving due to volume. Despite what the US market look like the world market, a market Wolf sells to, consumes far more 5.45x39 and 7.62x39 than 223. That actual raw material costs are fairly small part of the total cost of the ammo. Wolf probably has several times more capacity to load the x39 cartridges than the 223.
     
  4. AlexanderA
    • Contributing Member

    AlexanderA Member

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    The inflation in ammo prices is not cost-push, but rather demand-pull. A classic case of too much money chasing too few goods.

    Sending out $3,200 freebie checks to people, willy-nilly, made matters worse. Among "gun people," how much of that went toward ammo?

    The same thing happened to the real estate market, the car market, and to guns themselves.
     
  5. milsurpguy

    milsurpguy member

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    Yeah supply and demand.
    There's a hell of a lot more demand for 5.56 than 5.45.
    5.45 at $300 per case will barely move. 5.56 at $500 a case is probably selling pretty good.
     
  6. entropy

    entropy Member

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    The reason the 7.62x39 is cheaper is the cost of the equipment to make it was long ago covered by the Soviet Union, whereas the .223 equipment is post-fall, and the cost of that equipment has probably not been amortized out. Plus they probably are sitting on millions of rounds of x39, but are scrambling to run .223 off the line as fast as they can.
     
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  7. crestoncowboy

    crestoncowboy Member

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    Look at 410 vs 12 guage.....
     
  8. Barbaroja

    Barbaroja Member

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    I think we should consider how vertical integration as well as workers wages and environmental restrictions may have effected the cost of production. If the owners of wolf own the mines and refineries where they source their raw materials that would change things drastically for a manufacture.
    I wouldn’t disregard government influence as well.
     
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  9. CapnMac

    CapnMac Member

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    The production of ammo in Russia is going to reflect Russian (and European) market "needs."
    The "x39" ammo will sell "locally" as well in much of Asia, which will be simpler shipping & handling than across the ocean to the US.

    Now, if Wolf (for example, only) had a plant in Wyoming, then, those prices might be more of a head-scratcher.
     
    270OKIE likes this.
  10. reddog81

    reddog81 Member

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    The prices of copper, brass, steel and even lead have increased over the last year, however this has only been a small part of the price increases we've seen at retail. The increased materials cost means that prices won't drop back to under $8 for a box of 9mm ammo any time soon. There's less than a dollars worth of components in a box of ammo.
     
  11. ColoradoMinuteMan

    ColoradoMinuteMan Member

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    Several people have contributed a lot of good information. To add too it, the costs in producing goods really boils down to these factors.
    1. Labor
    2. Energy (primarily fossil fuels)
    3. Technology for production
    4. Consumable materials needed for construction
    5. Cost of compliance to regulations
    The cost of the materials will have a general lift on costs for all the lines of ammunition, and is undoubtedly reflected in the cost difference between 7.62x39 and 5.45x39. However, the cost uplift on 5.56x45 is likely much more due to economies of scale. While the eastern block cartridges likely take advantage of economies of scale of bulk military orders from easter block countries.
     
    High Plains likes this.
  12. John_R

    John_R Member

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    If you subtract the increases in material costs, the retail costs might be a tiny bit less, but I doubt it'd be much.

    It's a little like building the same 2,000 s.f. house in Kansas vs. Malibu. The same house in Malibu will sell for 4x more than the Kansas house, but not so much because of material costs.
     
    George P likes this.
  13. crestoncowboy

    crestoncowboy Member

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    Do those countries still use polymer/ lacquer coated steel cases. Or just still use the machinery to make civilian ammo. I used to buy a lot of 5.45 that was surplus but i wondered if they hadn't gone to better ammo. It really was some nasty in accurate stuff. Lol
     
  14. ColoradoMinuteMan

    ColoradoMinuteMan Member

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    I don't know what a current Russian spec is for case treatment but historically it was lacquer coated or copper plated/washed. One thing is for certain, they use some sort of case treatment, otherwise the steel would rust.
     
  15. George P

    George P member

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    It is not, and never has been, solely about material costs. Let's not forget the inflation the current admin has generated, fuel, wood products, utilities, taxes, insurances, marketing are all a bigger part of the cost than the material costs.
     
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  16. milsurpguy

    milsurpguy member

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    Yeah theres probably an oversupply of 7.62x39 forming dies and machinery out there.
     
  17. readyeddy

    readyeddy Member

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    I think FL-NC's info tends to disprove the theory that increased ammo prices are due solely to increased cost of materials.

    I'm sure some of the costs have increased, but even if all costs, fixed and variable, were to be the same today as they were in 2019, today's ammo prices would show some level of increase due solely from the increase in demand.

    Naturally manufacturers would attempt to avoid being seen as opportunistic price gougers, but how can they resist not implementing some level of price increase and then claim to be just keeping up with inflation.
     
    FL-NC likes this.
  18. Riomouse911

    Riomouse911 Member

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    Increased raw material cost is a piece of the pie, but not the whole pan.

    Demand is a huge piece. Ask yourself honestly; if you walked into your LGS and saw a pallet of 9mm, .223 (or .45 or .380 or .357, whatever you shoot) and bricks of primers at pre-pandemic prices, all with no buying limits... would your shopping cart be creaking under the weight when you checked out?

    You’re not alone, mine sure would be. Millions of others all across the land would also buy at those prices...until they couldn’t buy any more.

    A few possibles adding to this mix; People have disposable income that rose at higher rates now than anytime since 1984,
    https://www.npr.org/transcripts/944375878
    Some of this is certainly temporary stimulus $$, some from the Federal unemployment check increases and other $$ from not spending money all year on other stuff because we were locked down (my excuse).

    Add in a new-shooter gun buying spree after the idiotic calls to “defund the police” in the midst of the most violent and destructive rioting seen in this country in over 30 years. Minneapolis alone is looking at $500 million in riot related damage.

    https://www.thecentersquare.com/minnesota/gov-walz-requests-federal-funding-after-riots-caused-500-million-in-damage/article_bcf0f4d4-bfaf-11ea-abc6-b77194d7f388.amp.html

    Is it any wonder guns and ammo are flying off the shelves, often to new gun owners paying prices that we would have laughed about in February, 2020?

    Supply chain issues from the lead and copper mines all the way to the retail outlets, higher energy and shipping costs, increased labor costs... it just never ends.

    There is just no simple answer to this complex national (and international) problem. I’m hoping it’ll slow down and ultimately recede as people come to their senses.o_O

    Until then... stay safe.
     
    Demi-human likes this.
  19. mjsdwash

    mjsdwash Member

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    its funny how supply/demand is driving up prices, but demand without need is the definition of an economic bubble. Can any here say most, even half of their friends who have been hit hard by this would buy bulk if prices dropped? I know, and I mean know, that only 2 people, of the dozens of shooters, and 8 or so reloaders I know, who have been complaining loudly this whole year, would actually go out and stock up if stock returned. Everyone else will wait until the next panic, and complain they didn't see it coming.

    Just like when Anderson stripped lowers were being sold new for $31.00 Out the door. I called every shooter I knew, not one taker. I put one of those lowers on a $279 PSA kit. Have a friend who didn't think it was worth it then, "need it' for $900 a year later.

    Anyway, if supply/demand are dictating this market, then when the new owners settle down, and the hoarders run out of moms social security check money, that'll be the bubble. If it happens, tell everyone you know. You'll feel better telling them "no" in the next panic. Human nature is to panic when others panic.
     
    DoubleMag likes this.
  20. lsudave

    lsudave Member

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    Here's one thing I'm taking away- you need at least one 7.62x39 gun for SHTF purposes.

    Best I remember (I might be off), that used to sit around $200 a case. I seem to remember buying a case over a decade or longer ago, for that price. It was sitting around that price in 2019, before the sky fell. Unlike every other rifle caliber (including the other Russian listed, 5.45), it never became impossible to find; and it seemed to peak out at $400 a case. So for worst case scenario, you were looking at 2x the pre-panic price.

    Now, the fly in the ointment for that theory is that AKs have gone through the roof. The AR is perceived to be flaky with that caliber. SKS's are now $500, and Mini 30's are probably a grand and temperamental too. I have a pair of SKS's, and built an AR for about $500 that I think runs steel consistently. I killed an extractor with the first shot, but since putting a standard (223) extractor in, it's run fine since. I picked up a couple extra for cheap, and BCA sent me a replacement.
     
  21. Double Naught Spy

    Double Naught Spy Sus Venator

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    Your theory is way too simple. Part of the reason 7.62x39 is so cheap is because of economies of scale. https://www.investopedia.com/terms/e/economiesofscale.asp

    Plus, then there are the other reasons others have noted as well.
     
  22. BCR#1

    BCR#1 member

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    My 74SF loved the Bulgarian Wasp ammo but I only saw it twice at the creek for sale back in the days when browsing the wares in the pole barn was a worth while trip of 6 hours north. Now, not so much.

    Bill
     
  23. Steve S.

    Steve S. Member

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    My theory about this theory is that the price increase is an incremental accumulation of all the causes listed and some not listed - in other words, lots of reasons for the increase. In turn, the reasons do not matter to the buyer, only the results matter. You cannot control the supply, you can only manage your demand. If you manage your demand (ie. stock up heavily when prices are low, have lots of wealth so prices do not matter, reduce your shooting volume, etc), then these kinds of price increases will not matter so much.
     
  24. crestoncowboy

    crestoncowboy Member

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    I did the same with ammo for several years. I sent links to 150 dollar cases of aguila super extra. 13 dollar a box winchester ranger T in 40. 15 dollar HST. Herters bricks of 22 for 13 shipped.. 20 dollar/50 rds of 45 Gold dots.....

    As far as I know not a single person bought any.
     
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  25. lsudave

    lsudave Member

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    Well, there are certain things that apply, and certain that don't.

    I own handguns and rifles, but wasn't an AR guy. I had plenty of ammo calmly acquired over the years, but I will admit that 2020 did create a panic-instinct in me. It didn't make me pay totally insane prices, because I acted as soon as I felt things were just off, just weird.
    I like to keep S&B and Fiocchi 9mm, and would happily add a case for $160 every so often. Last spring, when there was the big toilet paper panic, I figured the ammo run was just around the corner- which it was. By the time I decided to top off my supply, $160 for brass was gone, but approx $200 (total cost, with shipping and tax figured in) was still around. So I added a few at that price, over the period of a couple months (let's say a case with every paycheck). Before you say "you're hoarding!", consider that I pay for a family membership to a range (annual fee, so unlimited usage), my son and I would go shooting at least weekly, probably at least 100 rds apiece. So I basically added a year's worth of ammo at that pace.
    At at the time, being a member, they gave us a magnetic card allowing us to come in afterhours and shoot. So we could go there alone, not risking getting exposed to anything. I actually figured our range times would increase, since everything else was getting shut down.

    Now let's be clear here- THAT panic passed, as summer approached. By late April, prices were stable and some places, dropping back down again, and stock was coming back. I was able to pick up a case of Gold Dot 9mm from targetsportsusa for $399 at the end of April- which was 50% off the standard price. I figure that to be a one-time expense, I don't plan on that being range ammo.
    There's no way that would have been available at that price, had the crunch we're in now have already started.

    While that case was still shipping, the world (the US, specifically) went insane, with riots springing up around the country. That's when the second, far bigger push to buy began. At that point, I actively decided I wanted an AR, to have a light semiauto rifle with good capacity; as nuts as things were, I just didn't feel like a 9mm pistol, or even an SKS (which I have) was enough. I don't think any of us honestly knew how bad things would go, and it was getting to a point where I didn't want to find out the hard way. We all joke about SHTF, well things were well on the way at that point. I looked AK first since I have the ammo (SKS); way too pricey. So, AR, plus ammo. I found a Radical AR for $475 in mid June, as soon as I got the order confirmation I picked up a case of IMI for $360. Added "a few" mags for $7 apiece (Korean, good reviews), and the place I got them had Tula 223 for $250, I added that too. In July, they had more Tula, so I added more mags and Tula; another place had Silver Bear for $275 so I added that... picked up a 2nd AR (also a Radical) for my son, $525 from Primary Arms.

    At some point I considered the storage issue, did a little research, and picked up a bunch of surplus ammo cans. The 50 cal GI steel ones, not plastic. Someone (Lucky Gunner maybe) had them on sale for about $7, in 'fair' condition. The seals were intact and good, a couple had some rust spots. I cleaned them up good, repainted, a $5 can of silicone spray to dress all the seals. We had a big flood here in 2016, and those cans survived being underwater for a week without issue- I had already picked some up for important documents. My papers, and my ammo, are now safe for long-term storage. I loaded them outside on dry, hot days, and they're kept inside in the ac. It took a good effort to break the seal free to open one recently, it's vacuum tight.
    So, a HUGE unplanned expense last year, compared to my normal habits. But 2 rifles, 4k of ammo and plenty of mags.... like the Gold Dot HP, I again figured it as a 1-time buy; and I have since been riding it out without need of any more.
    This past month, I pieced together an AR in 7.62x39, after watching how the various calibers have priced out. I spent about $500 total, nothing fancy but made sure I got the right mags, and that the gun would run any steel.

    I shudder to think of what it all would have cost, if I had waited. In my point of view, I kept working the whole time, so I had steady income. And any vacation plans were scrapped (heck, so were a lot of dinners and movies), so I probably didn't push the annual budget very much... and I won't need to do so again.
     
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