I understand that, but I remember there being reports of .22 shortages as far back as 2008, when Obama was first elected. That was 6 years ago. So I wouldn't really call the current shortage that big of an upswing.
I disagree that the market will become saturated in a year or two, with production as it currently is. As long as new (and old) gun owners are buying guns, the demand is just going to increase (like me for example, I got my first gun 7 years ago, and just bought my first rimfire a month ago). The number of gun owners in the US and Canada is on the rise, and what does everyone always say? "Your first gun should be a .22". Especially with all of the new guns being made, new models being introduced, conversion kits and dedicated uppers being built, higher capacity mags being designed, etc. There's currently no threat of any of these guns being banned, yet the demand is still there while the AR market bubble has burst. The shelves are as bare as they were in 2012, and we're even starting to see the shortage creep up here into Canada (here and there but not everywhere). The US ammo companies are running their lines nonstop, and nothing has changed. Nothing will if everyone keeps doing what they're doing. I see it as more of a reluctance to invest so much capital into starting new lines and making it back a fraction of a cent at a time then them predicting that the bubble will burst.
It will be interesting to see if they add enough capacity to make a dent in the demand.
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It's interesting that none of the existing US manufacturers have added more rimfire production lines. If the demand is going to continue to be so robust, then why wouldn't they? They already have the expertise and experience, so all it takes is money, and a lot less than starting from scratch with no experience or expertise.
Also consider that the centerfire shortage of a couple years ago is pretty much caught up, lots of stock around. Now the attention has turned to rimfire. It's now it's turn. In a year or two, supply will also have caught up to demand, the horders will still have full lockers, and prices will come down.
Reality is that rimfire is a high volume, low margin business.
It's interesting that about 4 years ago, I was part of a team doing a feasibility study for an iron ore mine. The price of iron ore at that time was constantly increasing, from $80/tonne to over $140/tonne. Yet the price used by the mining company for profitability of the project was about $70/tonne. Meaning if the cost of the project was over $70/tonne, then the project wouldn't proceed.
The project ($2 billion) proceeded to construction over the last couple years, with iron ore prices from $130 to $150+ a tonne. The project hasn't started producing yet, but the price of iron ore this week is under $80/tonne!!! And the price isn't expected to rise above $85 - $90 a tonne for the next year or two. Nobody could imagine the price of iron ore going back down that low, but here we are, 4-5 years later and looking at those prices just above where the project is just breaking even.
Several new iron ore mines with costs around the $90-$100 tonne mark have recently shut down and a couple have declared bankruptcy. Same thing has happened with lithium mines that were so hot a couple years ago, and even a number of high cost gold and silver mines. Look at oil prices, around $80/barrel, down from $100/barrel the past few years. This is putting pressure on oilsands projects, because their oil is already being sold at around a $15/barrel discount.
A business with high capital costs and low margins has to be viable during times of "normal" prices, not just during times of peak prices. Evidently almost all the rimfire manufacturers don't feel this existing demand/pricing is going to be sustained in the long term. If they did, they'd be adding more lines to capture greater market share, but they're not. I believe that at least one manufacturer has subcontracted overseas manufacturers (S&B) to produce for them.
Just a couple cautionary points about starting a business, producing a commodity, during a bubble.
The real question to ask yourself, would you start this same business if the prices were the same as one or two years ago?
