Russia faces the risk of losing the largest market for cartridges :: Business :: RBC
The import of cartridges from Russia to the United States for eight months of this year reached 114 million – almost the same as for the entire last year (about $ 118 million), follows from US customs data. The average annual indicator for the last ten full years is $ 102 million. Russia accounts for 21% of the total imports of imported cartridges in the United States in 2020, this is the first place among suppliers (in second place is South Korea with an indicator half as much, in third place is the Czech Republic ).
Russian cartridges of the market are about 4% of all American firearms, taking into account their own production (about 9.7 billion cartridges), spoke in September to the profile site The Firearms Blog, economist of the industry consulting company Small Arms Analytics & Forecasting Jürgen Brauer. According to the company, in 2020, US importers imported more than 765 million cartridges from Russia (total imports from all countries amounted to about 3.5 billion cartridges).
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In the early 2000s, 70-80% of the cartridges produced in Russia were exported, reminded the editor-in-chief of the magazine “Arsenal of the Fatherland” Viktor Murakhovsky. According to him, the lion’s share of these exports went to the American market. “This is not to say that the situation has changed dramatically by 2021. Almost all Russian manufacturers of cartridges live in export. The USA has the largest cartridge market in the world. Individual possession of weapons is widespread there, there are many shooting clubs, and the shooting culture is developed, ”- an expert assessment.
How do these sanctions work?
Immediately, the supply of Russian cartridges to the United States will not stop due to the sanctions. “New or already approved apps.”
At the same time, American importers had the theoretical opportunity to have time to issue new permits in the time between the imposition of sanctions and their enactment. information US Customs and Border Protection).
The Alcohol, Tobacco, Firearms and Explosives (ATF) Agency of the United States Department of Justice. Accordingly, import under an already issued permit (which according to law There are two years) may continue. Therefore, the American company, for example, received permission to determine the number of Russian cartridges in July 2021.
As The Firearms Blog explains, in order to obtain ATF permission, the importer fills out the so-called Form-6, in which, among other things, he declares the amount of goods that must be imported (for example, 20 million cartridges from Russia of 7.62 mm caliber produced by a certain cartridge factory). This form is approved, these 20 million cartridges can be imported in any number of different lots, and each of them is declared at US customs through Form-6A (which does not need approval). According to the Firearms blog, US importers with Form-6 approved by September 7th. It is impossible to estimate how many Russian cartridges are still left to be imported into the United States and until what time is it impossible from public sources.
The fact that Russian patrons continue as part of the supply of import permits is indicated by the data of the ImportGenius customs database: there, for example, there is information on the arrival of consignments from the Barnaul Cartridge Plant and the Novosibirsk Cartridge Plant to American importers on September 15.
Do Russian manufacturers of cartridges need state support?
Since 2014, the United States has imposed sanctions on many Russian defense-industrial companies – for example, against the Kalashnikov concern. But most of the cartridge factories remained outside the limits. Only the Tula Cartridge Plant (TPZ) group suffered from US financial constraints in 2018: its then-beneficiary Igor Rotenberg was included in the US Treasury’s sanctions list, and payments from American customers due to TPZ were blocked according to the “50% rule.” in the plant’s reporting, he himself was not included in the US sanctions list). In 2019 Rothenberg came out from the capital of the TPZ, and the sanctions against the company, according to the rule, should be terminated. However, it is unclear how TPZ is perceived by the compliance departments of its counterparties: as of the end of 2020, the funds of the plant in the United States have not been unlocked, the current beneficiaries of TPZ are not disclosed.
Due to the sanctions, domestic manufacturers of small arms and ammunition lose about 10 billion rubles. revenue per year, said in 2019 Sergei Abramov, who served as industrial director of the arms cluster of the state corporation Rostec.
Barnaul Cartridge Plant among its partners indicates American companies such as DKG Trading, Academy Ltd., Sporting Supplies International and MKS Supply. Owner of the latter Charles Brown said On August 21, the industry portal Arms and ammunition, that his company has approved several million Barnaul cartridges, but these deliveries “will expire very quickly.” In his opinion, the sanctions will extinguish the existing shortage of ammunition in the United States.
Some manufacturers of cartridges have contracts with buyers to operate at least until the end of 2021, said Vladimir Zhikharev, executive director of the Union of gunsmiths of Russia, in an interview with RBC. Therefore, the main question now is whether the enterprises will really complete the contracts, he said. This, in turn, depends on US importers. In each case, the situation is different, says the interlocutor of RBC. In the general case, the contract volumes / delivery times and the import permit do not need to coincide (for example, the contract in theory can be valid in 2025, the import permit – only until 2022).
“If an American importer has received an import permit for the entire contract, the Russian company will supply the entire contract. If a permit is received for only one cartridge, the importer will receive one cartridge, ”Zhikharev explained. A significant part of the Russian-made cartridges was assessed by an expert, Zhikharev assessed, but, according to him, it is difficult to name a specific assessment. According to the reporting data of the Tula Cartridge Plant for 2020, 46% of its sales are exported (the financial statements of other cartridge factories were not available in the public domain).
“These products are very specific. At the same time, we know that arms manufacturers have been able to find new sales markets since 2014. With cartridges, finding your niche will be a little more difficult. But, I am sure, this is also a matter of time and state support, which ammunition manufacturers need in connection with the new sanctions, ”concluded Zhikharev.
Dropped out of the cage: how the sanctions affected the production of cartridges in Russia
What forms of state aid are possible
“The possibility of providing state support [патронной отрасли] is, and most likely it will be provided. It’s another matter that this state support does not apply to all manufacturers, ”says independent economist Vladimir Tikhomirov. In his opinion, as a result of the US sanctions, the consolidation of the industry (unification of players) is possible and, accordingly, a reduction in aggregate production. State support can take the form of low-interest loans, an increase in the state defense order in terms of patrons, or direct subsidies to enterprises.
TPZ notes in its 2020 reporting.
According to Small Arms Analytics & Forecasting, the annual sales of cartridges in the United States are about 11 billion units. There is no such demand anywhere, Russian producers simply have nowhere to redirect the flow, Murakhovsky emphasizes. “The state defense order does not fulfill these losses, because usually, when we talk about the state defense order, we mean the renewal of reserves, and not some large ones.” [дополнительные] supplies, ”he explained. There is no official information about the domestic market of ammunition in Russia (for example, Rosstat does not publish data on the volume of production of ammunition cartridges).
There is no need to wait for the revision of the sanctions, the expert is accused. “A certain share will be taken by the Balkan factories, which once had a Soviet license for the production of ammunition, the licenses have long expired, but, despite this, the factories continue to produce,” concluded Murakhovsky.
General Director of the Novosibirsk Cartridge Plant Svyatoslav Dobrynin told RBC that “we do not comment on this issue to the press.” The Amur cartridge plant “Vympel”, as well as the Barnaul, Tula and Klimovsky cartridge plants did not respond to RBC’s request. Unanswered inquiries and American importers of Russian cartridges.
RBC sent a request to the government, the Ministry of Industry and Trade and the Ministry of Defense.
Lack of cartridges
The coronavirus pandemic and record sales of cartridges in the United States have already led to a shortage in the market. According to US media reports, amid the coronavirus panic, people were lining up to buy weapons and ammunition. Along with the growth in sales, the price has also increased. In July of this year, US National Shooting Sports Foundation Public Relations Mark Oliva declaredthat the influx of new buyers over the past year and a half has led to empty shelves and high prices. “Earlier the 5.56 mm cartridge for the AR-15 assault rifle cost about 33 cents, now its price is close to the dollar. So ammunition has become much more expensive and much more difficult to find, ”he stated.