Gunpowder is a resource that can be used to create ammunition.
You need 3 Gunpowder and 1 Metal Fragments to create 9mm Ammo, 1 Gunpowder and 2 Metal Fragments for 556 Ammo, and 5 Gunpowder and 1 Stone for a Handmade Shell. Gunpowder is also used in crafting explosives.