Trying to fuse a Lvl 1 and 2 Vitality Materia to a Lvl 30 Steel Celata

When melding - it states that the Item level is too low and will not receive the full benefits of the meld. (+0 Vit for both)

Is there something we are missing here? or have we indeed stumbled upon a bug?

World: Adamantoise
Charachter: Kysis Aetherwhisper