There's a couple of convoluting points here.

(1) the game does suggest that items, including consumables, can only be bought or created if you're of sufficient level
(2) but, the game also suggests that such items should not be found in treasure parcels unless you're of sufficient level (minus 3 or 4, you're supposed to find higher level stuff)
(3) healing potions are an exception to pretty much everything.
(4) reagents are, indeed, no longer worth it at the appropriate level
(5) almost without exception, consumables are a really bad investment
(6) the DM does appear to take a strict rules approach over an "if it's cool I'll allow it" approach, which is a matter of taste

So strictly speaking, the DM is following the rules. Also, strictly speaking, that particular part of the rulebook is poorly thought out.

The cheapest "rules legal" way I can think of to boost your flaming sphere is to buy veteran's armor; for the price of only a handful of reagents, you can cast two flaming spheres per day permanently.